Concerning risk per trade sizing - Psychology and Money Management | futures io social day trading
futures io futures trading


Concerning risk per trade sizing
Updated: Views / Replies:19,403 / 151
Created: by Big Mike Attachments:10

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 10  
 
Thread Tools Search this Thread
 

Concerning risk per trade sizing

  #131 (permalink)
Elite Member
denver, colorado
 
Futures Experience: Intermediate
Platform: NT
Favorite Futures: ZS
 
Surly's Avatar
 
Posts: 704 since Mar 2011
Thanks: 628 given, 1,242 received


liquidcci View Post
In regard to market being random. I think at any given moment their can be randomness about it. But overall it is not random. At one time I was convinced it was random until I started really using probabilities in my trading. My probabilities clearly say it is not random.

I agree. In response to theorists who profess the doctrine of random walk I quote Samuel Johnson...

"After we came out of the church, we stood talking for some time together of Bishop Berkeley's ingenious sophistry to prove the non-existence of matter, and that every thing in the universe is merely ideal. I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it. I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it, 'I refute it thus.'"

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
Reply With Quote
The following 3 users say Thank You to Surly for this post:
 
  #132 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,698 since Oct 2009
Thanks: 3,041 given, 4,498 received


monpere View Post
...

3. I don't know how one 'sees' trapped traders, I'm not part of the borg collective, so I don't know who is trapped and who is not. Since you mention it, I guess you have a window onto every trader's entries, stops and exits which determines their level of entrapment.
...

Domage this concept is not discussed more often as i think it's at the heart of the trading game. Trapped traders is a concept that has to do with crowd psychology specially when stressful situations occur. You don't need to be a cyborg to predict how a large group of participants will react if stress enters into the equation. This is similar to what can be seen in a shopping mall when a smoke alarm sounds. You can almost predict with a high degree of certainty the crowd will move toward the many exits. Same concept is applicable to trading participants at S/R.

Reply With Quote
The following 2 users say Thank You to trendisyourfriend for this post:
 
  #133 (permalink)
Trading for Fun
Little Rock, Arkansas
 
Futures Experience: None
Platform: MarketDelta
Favorite Futures: Options
 
r3algood's Avatar
 
Posts: 198 since Jul 2011
Thanks: 106 given, 105 received


All this debate is good and all but I think the thread needs to take a step back and refocus.

The only thing that matters in trading is whether YOU are consistently profitable, not your friend, or your buddy on the forums.

Trading is a probabilities game, who cares whether it is 0%-100% or anywhere in between?

You will either make money or lose money on a trade.

Again, the only thing that matters in trading is whether YOU are consistently profitable.

Reply With Quote
 
  #134 (permalink)
Trading for Fun
Little Rock, Arkansas
 
Futures Experience: None
Platform: MarketDelta
Favorite Futures: Options
 
r3algood's Avatar
 
Posts: 198 since Jul 2011
Thanks: 106 given, 105 received


Big Mike View Post
Bob drives to work every day for the last 10 years using the exact same route from his home to his work place. He also drives home every day the exact same route from his work place to his house.

He drives himself. He does not have a robot driving for him and he is not using cruise control, GPS, or some other mechanical system. He is a discretionary driver. If he wants to change lanes, he does so, he does not need to wait for his rule book to say it is ok to change lanes.

Over the last 10 years, Bob has found it takes him between 30 and 40 minutes to get to work.

How long do you think it will take Bob to get to work for the next few months, on average?
A) 30-40 minutes
B) 5 minutes
C) 2 hours

Mike

A) 30-40 Minutes.

Discretionary trading is almost exactly like your analogy here. Bob instinctively knows when to change lanes, he doesn't need to consult his drivers manual before doing so. He instinctively knows how to get to his workplace, he doesn't need to consult a map. The problem with beginners that attempt discretionary trading is that they simply do not know enough or practiced enough or had enough live trades to get this "instinctive rule book" in their heads. AND once people do have the "instinctive rule book" in their heads they sometimes find out that their rules aren't suited for making money in the markets and must change or go broke.

Reply With Quote
 
  #135 (permalink)
Trading for Fun
Little Rock, Arkansas
 
Futures Experience: None
Platform: MarketDelta
Favorite Futures: Options
 
r3algood's Avatar
 
Posts: 198 since Jul 2011
Thanks: 106 given, 105 received


Big Mike View Post
Strongly disagree.

Mechanical traders and automated traders base their probabilities on prior backtests or prior forward tests. Either way, it is on a set of sample trade data.

Discretionary traders do the same thing. As I explained before when you brought this up, if you take the prior 1,000 discretionary cash trades and analyze them, you can define threshold parameters for what the next few hundred trades may look like --- just like you would with a mechanical or automated system.

It is all apples. Not apples and oranges. Apples for my last 1,000 trades, and apples for my next 1,000. All apples and all consistent with the same approach.

Mike

Discretionary traders do the same thing. As I explained before when you brought this up, if you take the prior 1,000 discretionary cash trades and analyze them, you can define threshold parameters for what the next few hundred trades may look like --- just like you would with a mechanical or automated system.

It is all apples. Not apples and oranges. Apples for my last 1,000 trades, and apples for my next 1,000. All apples and all consistent with the same approach.


Best way of putting it in the entire thread.

Reply With Quote
 
  #136 (permalink)
Elite Member
Bala, PA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
 
monpere's Avatar
 
Posts: 1,858 since Jul 2010
Thanks: 300 given, 3,276 received


Big Mike View Post
Strongly disagree.

Mechanical traders and automated traders base their probabilities on prior backtests or prior forward tests. Either way, it is on a set of sample trade data.

Discretionary traders do the same thing. As I explained before when you brought this up, if you take the prior 1,000 discretionary cash trades and analyze them, you can define threshold parameters for what the next few hundred trades may look like --- just like you would with a mechanical or automated system.

It is all apples. Not apples and oranges. Apples for my last 1,000 trades, and apples for my next 1,000. All apples and all consistent with the same approach.

Mike

Ok, I'll bite. And as always, I believe in putting some teeth behind the rhetoric. I trade a 4 range chart mechanically, so the method can easily and accurately be backtested, because every trade is identical. I can manually backtest 1000 trades in about 4 hours easily and gather the stats.

Big Mike, you now trade very big charts. The smallest chart you mention trading is 60m, and use S/R based stops and targets on even larger charts, and you scale in, and scale out at various discretionary points. That is what I gather from your most recent posts. Based on those parameters, I think we can agree that backtesting this methodology would be less then accurate, and that is the reason you mentioned forward testing actual trades.

Based on all the above, let's conservatively assume you are taking an average of 1 trade every 2 or 3 days. Let's also conservatively assume that there may several days sometimes when you are not in any trade at all. How many days will it take you to forward test 1000 actual cash trades? I know you trade live, but for the sake of this argument lets say, given you are trading 'probability', we'll assume you will not trade live until you get the numbers from the 1000 trades. How many days will it take you to forward test?

Not judging your style of trading, or methodology, or any nonsense like that. Just binging the rhetoric down to reality for the people who are reading these posts, trying to get real world ideas how to become profitable.


Last edited by monpere; March 8th, 2012 at 03:33 PM.
Reply With Quote
The following 3 users say Thank You to monpere for this post:
 
  #137 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,698 since Oct 2009
Thanks: 3,041 given, 4,498 received


monpere View Post
... How many days will it take you to forward test 1000 actual cash trades? I know you trade live, but for the sake of this argument lets say, given you are trading 'probability', we'll assume you will not trade live until you get the numbers from the 1000 trades. How many days will it take you to forward test?
...

Although it is adressed to Mike my answer to this is that a discretionary trader (the way i conceive it) does not feel the need to backtest in the same way as a mechanical trader would do. If you have a good understanding of what moves markets, what causes price to move and crowd psychology you would focus your attention on the process of trading not on triggers/signals or probabilities. You know the game is not about probabilities but about traders taking decisions and the impact it has on potential future order flow and future trend direction. The forward test is part of the process of trading, it is not an end in itself. A mechanical trader underestimates the value of skills in trading, he would look at markets as a big video game with red and green lights.


Last edited by trendisyourfriend; March 8th, 2012 at 06:27 PM.
Reply With Quote
The following 2 users say Thank You to trendisyourfriend for this post:
 
  #138 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,354 given, 83,237 received


ddnut View Post
Doesn't this illustrate the apples vs. oranges argument in a way? You entered the trade with a fixed target and stop and an expected success rate based on prior experience. Then based on how the trade progressed you added a contract. This could also be considered to be a separate, independent trade. In any case, the expected sucess rate going in has changed, no?

The point is that each discretionary decision changes the end results. Hopefully for the better or otherwise you would not be a discretionary trader.

I view it as one trade. Just like all my previous trades, I did not enter "all in". I entered knowing full well that I would add at a later opportunity, should one arise --- and that I would not add later should the opportunity not arise.

I pick one direction and trade that direction the entire day. If you are trading long/short (switching directions) a lot during the day then my approach is not going to work for you, and if you can make such an approach work then almost certainly AIAO would be better in this situation than scaling. But I haven't traded that way in a long time, and I find my slower way to be far better (for me personally).

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
 
  #139 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,354 given, 83,237 received


liquidcci View Post
There are so many counteracting forces in the market I have never considered I was competing with anyone.

I always think of trading as a competition against other traders. I think trading is every bit as much knowing what the other traders around you are doing as much as it is knowing what you want to do, and then of course recognizing when a bunch of traders are trapped -- and naturally, when you are (and to get out).

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
  #140 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,354 given, 83,237 received



monpere View Post
Ok, I'll bite. And as always, I believe in putting some teeth behind the rhetoric. I trade a 4 range chart mechanically, so the method can easily and accurately be backtested, because every trade is identical. I can manually backtest 1000 trades in about 4 hours easily and gather the stats.

Big Mike, you now trade very big charts. The smallest chart you mention trading is 60m, and use S/R based stops and targets on even larger charts, and you scale in, and scale out at various discretionary points. That is what I gather from your most recent posts. Based on those parameters, I think we can agree that backtesting this methodology would be less then accurate, and that is the reason you mentioned forward testing actual trades.

Based on all the above, let's conservatively assume you are taking an average of 1 trade every 2 or 3 days. Let's also conservatively assume that there may several days sometimes when you are not in any trade at all. How many days will it take you to forward test 1000 actual cash trades? I know you trade live, but for the sake of this argument lets say, given you are trading 'probability', we'll assume you will not trade live until you get the numbers from the 1000 trades. How many days will it take you to forward test?

Not judging your style of trading, or methodology, or any nonsense like that. Just binging the rhetoric down to reality for the people who are reading these posts, trying to get real world ideas how to become profitable.

I am not interested in fighting you, since it is clear what you think of me and my approach based on the content of your posts when you refer to me.

If you want more info from me on forward testing, sim vs cash, analyzing sample set data, chart sizing, instrument selection, and etc read this thread:
https://futures.io/elite-circle/11125-ask-any-trading-question.html

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote

Reply



futures io > > > Concerning risk per trade sizing

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Weird chatbox re-sizing annoyance? forrestang Tech Support 4 November 2nd, 2011 08:52 PM
'Operation Twist,' 'Duration Risk' Dangers to Bond Trade Quick Summary News and Current Events 0 August 24th, 2011 04:50 PM
Position Sizing by Van Tharp Laserdan Psychology and Money Management 21 July 8th, 2011 11:37 AM
Position sizing codes ptcm EasyLanguage Programming 2 January 2nd, 2011 04:24 PM


All times are GMT -4. The time now is 10:47 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.16 seconds with 20 queries on phoenix via your IP 54.227.51.103